On The Money – Dems hit businesses as they cash in amid rising prices
Businesses are reeling from high profits as consumers pay more for just about everything, and Democrats are angry about it.
We’ll also look at why a mortgage giant thinks a recession is on the way and the immediate departure of airline mask mandates.
But first, find out why a secretly recorded phone call has got Rep. Madison Cawthorn (RN.C.) in hot water yet again.
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As corporate profits rise amid inflation, Democrats cry foul
As consumers feel the pinch of inflation, corporate profits are at all-time highs, bolstering Democratic arguments that big business is ripping off consumers and making inflation worse.
Inflation has become a major headwind for Democrats ahead of this fall’s midterm elections, as the party risks losing its narrow House and Senate majorities. Rising prices have contributed to President Biden’s declining approval ratings, adding to concerns among Democrats.
But sen. Elizabeth Warren (D-Mass.) and other Democrats argue that it’s increasingly clear that part of the problem is big business and that Democrats need to go on the offensive to fight inflation by doing pressure on American companies to stop raising prices.
- Overall after-tax corporate profits, as reported by the U.S. Bureau of Economic Analysis and compiled by the Federal Reserve Bank of St. Louis, reached $2.7 trillion in the fourth quarter of the year. last year, just off the all-time high of $2.72 trillion in the previous quarter.
- This represents a 40% increase in profits from the pre-pandemic level of $1.96 trillion for the fourth quarter of 2019 and an increase of nearly 80% from the pandemic low point of $1.5 trillion. of dollars.
- John Butters, an analyst at FactSet, found that 356 S&P 500 companies cited “inflation” in fourth-quarter earnings calls, which was the highest number in at least a decade.
The record number of citations on inflation, coupled with skyrocketing profits, has led Democratic senators like Warren to cry foul.
“As we emerge from two years of the coronavirus pandemic, America’s efforts to get back to normal are being hampered by inflation, in part because of corporate profits and price gouging,” she wrote in a statement. letter to the FTC.
Tobias Burns of The Hill has more here.
Mortgage giant says US will experience ‘modest recession’ in 2023
Government-backed mortgage giant Fannie Mae said on Tuesday the United States would experience a “modest recession” in 2023 due to inflation and other economic factors.
The company predicted in an economic and real estate forecast that such a recession would be caused by record inflation in the United States, the tightening of monetary policy by the Federal Reserve and the effects of Russia’s war against Ukraine. .
“As such, we have updated our 2023 forecast to include a modest recession, but one that we do not expect to be similar in magnitude or duration to the 2008 recession,” Doug said. Duncan, senior vice president and chief economist at Fannie Mae, said in a statement.
- The company gave several reasons why it does not expect a recession as severe as 2008, citing the current state of the housing market, including “far superior” mortgage credit quality and loan servicers mortgages better equipped than them. were at that time.
- However, the company expects home sales, home prices and mortgage volumes to fall over the next two years, Duncan said. “In particular, we expect house price growth to slow to a pace more consistent with income growth and interest rates.”
Learn more about The Hill’s Lexi Lonas here.
WITHOUT A MASK?
Airlines rush to drop mask mandates
Airlines and airports are rushing to drop their mask requirements following a federal court ruling that struck down the federal government’s mask mandate for planes, trains and buses.
All major U.S. airlines announced that masks are now optional shortly after the Transportation Security Administration (TSA) said late Monday that, under the new ruling, it would no longer enforce its mandate.
- The big four carriers — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines — quickly rolled back their mask requirements on Monday night, with some passengers saying they heard about the policy change mid-flight.
- JetBlue, Alaska Airlines, Spirit Airlines, Frontier Airlines, Hawaiian Airlines and Allegiant Airlines also announced that masks will be optional on their flights following the TSA announcement.
The change comes as airports experience an increase in the number of travellers. The TSA screened nearly 2.3 million people on Monday, about 10% less than the same time in 2019.
Karl has more here.
AUF WIEDERSEHEN (GOODBYE)
SAP ends Russian operations after decades
SAP, a software company based in Germany, announced on Tuesday that it planned to leave Russia following its invasion of Ukraine.
“Today we are announcing further steps towards an orderly exit from our operations in Russia,” SAP said in a statement, adding that the company has operated in Russia for more than 30 years.
- He said he would give unsanctioned companies the option to have their data “deleted, sent or migrated to a data center outside of Russia.”
- SAP also said it will no longer provide support and maintenance for on-premises products. The company had previously announced that it would also halt sales in Russia and Belarus and had begun shutting down cloud operations in Russia.
Monique Beals from The Hill has more here.
Good to know
As the housing market remains volatile, with mortgage rates and house prices high, a new survey finds that more Americans are beginning to feel more pessimistic about the future of their own housing options.
A recent survey by the Federal Reserve Bank of New York showed that while households expect strong house price growth of 7% over the next 12 months, renters feel a lower likelihood of owning a home. a home, with their reported likelihood of owning falling to 43.4%. .
Here’s what else we’ve got our eyes on:
- The Department of Education announced Tuesday that thousands of borrowers could benefit from an immediate rollback of changes the agency said it would make to address longstanding failures in federal student loan programs.
- A coalition of House Democrats on Tuesday introduced a bill to strengthen workplace harassment and discrimination rules for matters involving congressional lawmakers.
- Treasury Secretary Janet Yellen will forgo some Group of 20 (G-20) meetings this week over Russia’s invasion of Ukraine, a US Treasury official confirmed to The Hill.
- The United States Postal Service will slow delivery times for a third of its first-class packages to reduce costs and its reliance on air travel amid financial difficulties.
That’s all for today. Thanks for reading and check out The Hill’s Finances page for the latest news and coverage. Well see you tomorrow.
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